Bank of the Year Awards 2019 – central and eastern Europe
The best banks of the past 12 months from central and eastern Europe.
Albania, Banka Kombëtare Tregtare
Banka Kombëtare Tregtare (BKT) has once again emerged victorious in Albania. The lender’s commitment to digitalisation, as well as its robust corporate social responsibility (CSR) programmes, secured it the top spot.
Though BKT’s net profits over the 2018 review period contracted marginally, by 3.7%, total assets and Tier 1 capital both saw positive gains, expanding by 4.5% and 2.9%, respectively. BKT’s return on equity of 18.7% was also robust, along with its cost-to-income ratio of 37.4%.
Meanwhile, the launch of a new international investment platform, known as ‘Smart-Invest’, caught the judges’ attention. The platform permits bank customers to trade and invest internationally, through a web-based and mobile application. Stocks, commodities and foreign exchange options are made available through Smart-Invest, meaning BKT has opened up investment opportunities across key global markets for its clients.
The bank also made several improvements to its mobile application, BKT Smart, in 2018. This included new functions such as QR code payments and interactive push notifications. Beyond these features, the application also permits users to break down their card transactions into instalments. In particular, when a client uses their card overseas they receive a push notification following the transaction, asking if they want to divide the payment into four instalments with 0% interest.
Traffic penalties are also catered for by BKT Smart. By registering their licence plate, customers receive a push notification on their mobile phone detailing the fine and offering the chance to pay with a 20% discount.
In terms of CSR initiatives, the BKT Fintech Academy provides on-the-job training for talented IT students to become professionals.
“We all look forward to BKT’s centenary in 2025. The past two decades, with uninterrupted growth and profitability, have been very encouraging,” says BKT chief executive Seyhan Pencablıgil.
In a competitive Armenia country category, Ameriabank’s exceptional growth metrics over the 2018 review period, coupled with the adoption of innovative new products and services, ensured that the bank emerged victorious. Net profits grew by 37.3% in local currency terms, while total assets and Tier 1 capital expanded by 15.1% and 28.1%, respectively. Notably, the bank’s net profits grew by double digits in both 2017 and 2016.
This performance has contributed to Ameriabank’s impressive growth in return on equity, which by the end of 2018 had increased to 12.6% from 10.2% in 2016. Over the same period, its cost-to-income ratio fell from 4.2% to 3.3%.
Ameriabank has also worked hard to improve its product offerings. An individual applying for a loan with a value of between 100,000 dram and 10,000,000 dram ($209 and $21,000) can now do so entirely online, thanks to the bank’s score modelling system. This offering was highly successful in 2018, accounting for 25% of the bank’s consumer loans by total volume. In light of this achievement, Ameriabank made further improvements to the scoring system in order to offer the online loan platform to small and medium-sized enterprises.
On the digital banking front, Ameriabank enjoyed considerable transaction growth. The number of internet and mobile banking users grew by 40% in 2018, while the volume of transactions in these domains increased by 59% over the same period. In addition, transactions executed through digital self-service channels, such as express banking self-service kiosks, expanded by 46%. In total, the share of transactions executed through digital or self-service channels reached 77% of the bank’s total transactions.
“The factors contributing to our success are good customer experience, up-to-date methods and a professional team,” says Artak Hanesyan, general director at Ameriabank.
After two years of effective stagnation, Azerbaijan’s economy gathered some momentum in 2018, expanding by 1.4% according to the World Bank. Indeed, the country’s economic outlook appears to be improving with most estimates indicating a growth rate of above 3% for both 2019 and 2020. The winner of the 2019 Azerbaijan country award, Kapital Bank, is well positioned to capitalise on this brightening outlook.
The lender has gone from strength to strength in recent times. In 2018, its net profits, Tier 1 capital and total assets all increased, while return on equity jumped to 40%, from 36.7% in 2017. Beyond its strong numbers, Kapital Bank also launched some impressive product and service offerings in 2018. Chief among them was the bank’s mobile application, known as Birbank, which enables customers to perform various functions on their phones. This includes QR code payments, QR code transfers and QR code cashouts, as well as a range of classic banking operations.
Kapital Bank’s unique card offering, BirKart, has also enjoyed success in the domestic market. Boasting more than 400,000 users, BirKart offers the bank’s customers payment flexibility through commission and interest-free instalment options over and up to an 18-month period. In addition, the card provides an interest-free loan for a period of 40 days for a one-time facility, while an SMS notification function keeps users abreast of all developments linked to their BirKart.
“In recent years, Kapital Bank has been successful in positioning itself as an efficient, progressive and sustainable financial institution in Azerbaijan. Meeting customer expectations, the next-level digital solutions, client-oriented approach and quality of our products and services help give us a competitive advantage in the country’s banking market,” says Rovshan S Allahverdiyev, chairman of the board of directors at Kapital Bank.
JSC MTBank impressed the judging panel on a number of fronts. Not only did it register impressive growth figures for the 2018 review period – building on the gains it made in both 2017 and 2016 – but it also displayed a peerless commitment to supporting micro, small and medium-sized enterprises (MSMEs), and to embracing digital innovation in Belarus.
In local currency terms, the bank saw net profits jump by 116% in 2018, while total assets and Tier 1 capital expanded by 120% and 126%, respectively. This was underscored by a return on equity of 37% at the end of 2018, while the cost-to-income ratio was 52% and non-performing loans were just 0.85%.
In 2018, the bank secured a synthetic loan from the European Bank for Reconstruction and Development to the tune of $10m to finance MSMEs in Belarus. Under the concluded loan agreement, the amount was fixed in Belarusian rubles equivalent to the current dollar exchange rate. This helped the bank to provide much-needed financing to this crucial sector of the business community, which has registered an increased demand in local currency loan options in recent times.
Meanwhile, JSC MTBank has also worked hard to boost its digital product and service capabilities. This includes the development of an artificial intelligence customer service proposition known as ‘Maria’, deployed to the bank’s telephone contact centre where the system can handle customer requests through automatic speech recognition technology. Indeed, over a one-year review period Maria answered 1.1 million calls and resolved, without assistance, 23% of these enquiries. In 2018, the bank implemented several upgrades to Maria, allowing the system to handle 40% more calls independently.
“MTBank has been successfully developing in the market, implementing innovations and new products, many of which have become an integral part of the entire banking sector of Belarus,” says Dzmitry Shydlovich, chairman of the management board at MTBank.
Bosnia-Herzegovina, Raiffeisen Bank dd Bosna i Hercegovina
Raiffeisen Bank dd Bosna i Hercegovina has prioritised digital innovation to gain an edge in Bosnia-Herzegovina’s banking sector. This includes the launch of the market’s first e-wallet solution, known as ‘m-plati’, as well as a web application process that enables customers to secure personal loans, credit cards and current accounts online.
This strategy has paid dividends for the bank, which has seen its return on equity improve substantially in recent years. In 2016, this figure was 14.4% but by the end of 2018 it had reached 17.5%. This performance was underscored by healthy net profit, total assets and Tier 1 capital growth over the same period.
The bank’s strategic initiatives are centred on improvements to the customer experience, of which the augmentation of digital offerings remains key. The implementation of multifunctional automated teller machines, known as BankomatIQ, allows customers to access all their Raiffeisen accounts using only their credit or debit cards and PIN codes.
Meanwhile, the rollout of m-plati has made waves in the country’s banking sector. Using an Android phone with near-field communication technology, customers can make payments by tapping their device at point-of-sale terminals, and can use m-plati without the need for an internet connection.
“Raiffeisen dd Bosna i Hercegovina continuously reports double-digit shares in total assets, loans, deposits and capital. We upgraded our online banking services and want to give our clients a sense of ease when doing business with Raiffeisen,” says Karlheinz Dobnigg, chief executive of Raiffeisen Bank dd Bosna i Hercegovina.
Bulgaria, Raiffeisenbank (Bulgaria)
Raiffeisenbank (Bulgaria) has had an enviable growth trajectory in recent years. In 2018, for instance, total loans increased by 14.6% against an industry-wide average of 8.6%. Over the same period, total assets expanded by 11% against a sector-wide figure of 7.9%. Meanwhile, the bank’s return on equity before tax hit 17.3% in 2018, while its cost-to-income ratio was 54.1%. Non-performing loans (NPLs) decreased to 3% in 2018, down from the 4.9% recorded at the end of 2017.
“Our strategy for smart organic growth is paying off. Our loans are growing two times faster than the market, while the NPLs are significantly below the average. Our mission is to transform continuous innovation into superior customer experience. We have been making significant steps in this direction and we are among the innovation leaders in the market,” says Oliver Rögl, chief executive at Raiffeisenbank (Bulgaria).
The bank has carried out the first local challenge of the wider banking group’s international fintech accelerator programme known as Elevator Lab. The accelerator aims to discover and build partnerships with new fintech groups in Bulgaria, with the intention of scaling these businesses up to a regional level across central and eastern Europe. Thanks to a local winner of Elevator Lab, Raiffeisenbank has been able to deploy an end-to-end consumer e-loan solution, the first of its kind in the market.
Meanwhile, the bank partnered with HBO to produce Europe’s first Game of Thrones-themed bank card in line with the airing of the final series of the programme in Bulgaria. The card also includes registration to the TV network’s streaming service known as HBO GO. In doing so, the bank mixed a unique entertainment proposition with its innovative suite of product and service offerings.
Croatia, Privredna Banka Zagreb
The Croatian banking sector has, on the whole, performed relatively well in recent years. Liquidity and capitalisation levels are sound, while asset quality is improving after a difficult period linked to the failure of one of the country’s major non-financial corporate entities. The winner of the 2019 country award, Privredna Banka Zagreb (PBZ), is no exception to this trend. In 2018, the bank’s Tier 1 capital and total assets increased by 0.2% and 9.8%, respectively. Though net profits registered a marginal contraction, return on equity was solid at 10.1%, while non-performing loans continued to fall.
This performance was underscored by several innovations and market firsts, particularly in terms of the bank’s digital product and service offerings. The PBZ mobile banking app boasts an improved and modern design that supports options for user personalisation, including profile photos and nicknames, as well as the use of biometric data for signing in and authorising transactions. Meanwhile, PBZ became the first bank in the country to offer its customers the ability to pay for goods and services with Google Pay.
In line with its commitment to financing Croatia’s small and medium-sized enterprises (SMEs), PBZ has also created specialist credit lines tailored to this business segment, and employs a fully automated credit scoring system for SME clients.
“Today, many believe that technology is by far the most important [factor in banking]. Technology is important but at the end of the day the best technology can be bought. Motivated, well trained, committed and positively oriented teams money can’t [be bought]. It takes full devotion, skill, time and belief to create them. Once you do it, the competition [can’t keep up],” says Dinko Lucic, president of the management board at PBZ.
Czech Republic, Ceskoslovenská obchodní banka
Ceskoslovenská obchodní banka (CSOB) secured the top spot in the Czech Republic country category based on the range of its strategic initiatives, its commitment to technological innovation, as well as its ability to offer tailor-made and customer-centric product and service offerings. In terms of its performance, CSOB registered a return on equity of 17.5% in 2018, while its non-performing loan ratio was just 2.4%.
In April 2019, CSOB reached an agreement with central and eastern European e-commerce giant Mall Group to establish a joint venture known as MallPay. Under this arrangement, CSOB will offer its customers a range of services including the deferred payment of goods for 14 days with no extra cost; insurance linked to purchased goods; a credit card with specific benefits and increased cash back from the Mall Group; and a dedicated MallPay app with loyalty benefits. The bank will also benefit from the additional data points related to customer shopping behaviour to improve its credit scoring and targeted product offerings.
In the same month, the bank acquired a 45% stake in building society Ceskomoravská stavební sporitelna (CMSS) from Bausparkasse Schwäbisch Hall, giving CSOB a 100% ownership interest. The deal was for a total consideration of Ä2240m. CMSS is the largest building society in the Czech Republic with Ä4.5bn in outstanding loan volume and Ä5.3bn in deposits at the end of 2018. The building society currently has about 1.3 million clients.
“Transformation has become part of our DNA. We are investing in new businesses and launching new services to deliver the best solutions for our clients. None of this would be possible without our amazing employees. They are the main asset of CSOB,” says John Hollows, CSOB’s chief executive.
Estonia’s LHV Bank has gone from strength to strength in recent years. Net profits increased by double digits in 2016, 2017 and 2018, while Tier 1 capital has expanded by above 20% each year over the same period.
This performance is accentuated by other metrics such as the bank’s return on equity, which was a healthy 15.3% in 2018, and its non-performing loan ratio, which was just 1.1% in the same year. Meanwhile, LHV Bank’s cost-to-income ratio fell from 54% in 2017 to 51.5% in 2018.
At the heart of this growth story is LHV Bank’s commitment to the customer experience. In January 2019 it introduced its new ‘entrepreneur account’ targeted at private individuals engaged in micro-entrepreneurship. This account ensures clients do not have to worry about financial statements, monthly tax returns or payment of taxes since these are dealt with automatically. LHV Bank worked on its entrepreneur account in partnership with Estonia’s Tax and Customs Board, offering a good example of how co-operation between banking service providers and state agencies can lead to effective client outcomes.
In addition, LHV Bank opened a UK branch in 2018, aiming to offer services to financial service providers as a new business line. This includes providing financial intermediaries with real-time payments services in both pounds and euros, as part of the UK’s faster payments service. LHV sees it role as being the link between new generation fintech services and banking infrastructure.
“Since the beginning in 2009, LHV Bank has embraced quality in customer experience, but also cutting-edge technological solutions. Offering services at the intersection of these two has proven to be key in order to create value-adding relationships with customers – retail, corporates and fintechs alike,” says Erki Kilu, chairman of the management board at LHV Bank.
Georgia’s TBC Bank demonstrated the right mix of innovation, ambition and healthy growth figures to land it the 2019 country award. The bank’s underlying net profits, which exclude one-off items, have surged in recent years. In 2018, they increased by 23.2% in local currency terms, while in 2017 this rose to 35.1%. This has been matched by strong total asset growth, with the bank registering a 19.5% increase in 2018. Tier 1 capital grew by 16.8% over the same period.
Meanwhile, TBC Bank’s underlying return on equity in 2018 was 22.8% while its underlying cost-to-income ratio was 37.8%. Encouragingly, its non-performing loan ratio was just 1.2% in the same period. These strong growth numbers have emerged as a result of the bank’s ambitious growth strategy. In 2018, for instance, TBC Bank launched a new strategic priority focused on international expansion. This strategy will take an asset-light, limited capital approach with a focus on digital channels.
In January 2019, TBC Bank signed an agreement with Azerbaijani lender Nikoil Bank to merge its in-country unit, TBC Kredit, into Nikoil’s business. The agreement has seen TBC Bank assume ownership of 8.34% of the merged entity, with the option of bringing its shareholding to 50% plus one share in four years’ time. In addition, in 2018 TBC Bank started to explore Uzbekistan’s banking market, and plans are now at an advanced stage for the launch of a next-generation, digitally focused bank.
“We are constantly looking for new ways to reinvent ourselves and expand our value proposition beyond traditional banking by building innovative new digital platforms to enhance customer experiences. We also aspire to transform the bank into an agile company in order to be able to adjust to the fast-changing environment,” says Vakhtang Butskhrikidze, chief executive at TBC Bank.
In a competitive country category for Hungary, K&H Bank’s suite of digital transformation initiatives, coupled with a healthy set of growth metrics, caught the judges’ attention in 2019. In local currency terms, the bank’s net profits jumped by 38% in 2018, while total assets and Tier 1 capital increased by 6% and 15%, respectively.
Notably, K&H Bank’s return on equity increased by a substantial margin in 2018, rising to 20.9% from 16% in 2017. Meanwhile, its cost-to-income ratio fell to 59.8% from 63% over the same period.
Beyond the numbers, K&H Bank has also made strides on its digital transformation agenda. More than 240,000 customers were using its mobile banking application as of May 2019, representing an 86% increase on the figures from the start of 2018. In addition, the rollout of cash-in ATMs across the bank’s network has, among other achievements, transformed 50 branches (out of 206) into fully tellerless locations. The outcome of this ongoing change is that K&H Bank is digitising its branches at a rate that few of its competitors can match.
In addition, the bank has been working hard to develop its robotic process automation capabilities. Having identified more than 130 processes across the business that could benefit from robotisation, K&H expects more than 20 bots to be live across several departments by the end of 2019. The bank is training its staff to become certified K&H robot programmers.
“In 2019, K&H accelerated its digital transformation, focusing on offering best-in-class user experience across channels, while simplifying its processes and organisation. As a result, K&H’s growth continues to outpace the market, supporting the Hungarian economy and delivering superior financial returns,” says K&H Bank chief executive David Moucheron.
Banka për Biznes (BPB) has prospered in Kosovo’s banking sector thanks to its focus on micro, small and medium-sized enterprises (MSMEs). It has, for instance, pioneered an approach to unbanked business clients by analysing a matrix of indicators that outline positive growth potential among entrepreneurs lacking banking services.
Indeed, the bank’s work in this area was of particular interest to the judging panel because BPB is using the experience it has gained from reaching out to unbanked entrepreneurs to assist groups that are often marginalised by financial services providers, including women entrepreneurs and the youth segment.
Under the bank’s financial inclusion programme, BPB is providing access to useful and affordable financial products and services to these market segments. One of the programme’s key objectives concerns the availability of financial services that meet the needs of users without any form of discrimination. As a consequence, the initiative not only addresses issues around financial inclusion but also tackles issues such as gender equality, unemployment and overall economic productivity within Kosovo.
Meanwhile, BPB’s performance metrics over the 2018 review period were robust. Total assets and Tier 1 capital both expanded by 24%, though net profits dipped marginally by –0.6% after increasing by 40% in 2017. The lender’s return on equity in 2018 was a healthy 27.5%, while its cost-to-income ratio stood at 56.5%. And despite the relatively higher risk associated with lending to MSMEs, BPB’s ratio of non-performing loans was encouragingly low at just 2.8%.
“There were no shortcuts to our success; we simply had to work hard and passionately pursue our goals by aligning the interests of our clients, staff and shareholders. This course shaped the most agile financial institution in Kosovo,” says Arton Celina, chief executive of BPB.
Lithuania’s iauliu Bankas enjoyed an outstanding year in 2018. In local currency terms, net profits jumped by 64%, while total assets and Tier 1 capital increased by 11% and 31%, respectively.
This performance was underscored by other positive metrics, including a return on equity of 22.3% and a cost-to-income ratio of 37.3%. Non-performing loans, meanwhile, were at a healthy 3.7%. These numbers have been supported by a range of strategic initiatives, as well as investments in technology, services and product offerings, and have ensured that iauliu Bankas secured the Lithuania award.
In 2019, the bank concluded an agreement with Raisin, a European lending and deposit platform, that permits it to accept deposits from the German market. This was an important step for the bank as it will ultimately diversify its funding sources, while allowing it to reach new markets at very low cost. The scale of the German market, where the household deposit portfolio amounts to Ä2300bn, will contribute to the bank’s longer term funding mix and support the Lithuanian economy.
Meanwhile, in 2018 iauliu Bankas launched a new card management system that delivers full online payment cards services such as giving a balance, security management and card limit management options, among others. (In the past, parts of the bank’s card management system were outsourced to a third party, which led to delays for employees and card holders when seeking information.)
“We believe that success is achieved by responding promptly to customer needs and continuously improving the quality of our services. While other market players are moving into the digital space, we leave it to the customer to choose how he or she wants to communicate with the bank. Flexibility and listening are our formula for success,” says Vytautas Sinius, chief executive of iauliu Bankas.
NLB Banka’s 2018 to 2022 strategy has a focus on, among other things, digital transformation and operational excellence. This approach is already bearing fruit. The bank has rolled out several new products and services, while updating its existing offerings, to meet a new digital age; meanwhile, internal efficiencies are being driven by reforms to its back-office procedures. These changes contributed to NLB Banka’s strong financial performance in 2018. Its return on equity was 17.3%, while its cost-to-income ratio fell to 37% from the 42% reported in 2017.
“As a modern and innovative bank, our power lies in our clear goals to be a step ahead of the market by becoming digital; investing in knowledge of the new era; offering the most contemporary banking products; while focusing on the customer experience and supporting the best working environment,” says NLB Banka chief executive Antonio Argir.
In September 2018, the bank introduced a new mobile wallet known as NLB Pay. Initially available to Mastercard users when launched, NLB Pay has since been upgraded to cover Visa users as well – making the bank the first and only institution to cover two card brands as part of its mobile wallet. Meanwhile, in June 2019 the bank introduced a chatbot, Nela, on the communication application Viber. This offers a 24/7 customer contact point for clients, giving them immediate responses on their products with the bank, as well as offers and marketing promotions.
“While investing in our business, our employees and our community, we behaved responsibly and professionally, and worked devotedly to respond to the upcoming changes in consumer behaviour, societal expectations and economic development, which will inevitably change the business models of modern banking,” says Mr Argir.
Moldova’s banking sector has been beset by difficulties in recent years. A culture of opaque corporate governance, as well as inadequate oversight, led to a major sector-wide crisis in 2014, leading to the collapse of some of the leading banks in the country. But change is afoot and the winner of the 2019 country award, Moldova Agroindbank (MAIB), is the standard bearer of a sector that is evolving for the better.
In October 2018, the European Bank for Reconstruction and Development, in partnership with two private equity firms, acquired a 41% stake in MAIB, equivalent to E23m. The acquisition followed a search by Moldova’s government for an investor as the authorities look to rebuild a well-run and transparently governed banking system.
MAIB has substantially strengthened its anti-money-laundering (AML) procedures by introducing an internationally recognised, online and three-module AML system. This system reduces the chances of transactions taking place with sanctioned entities under EU or UN regimes, for example. As a result, it positions MAIB as a market leader with respect to AML and compliance issues.
“As leader of Moldova’s banking sector, MAIB has always set the tone on the market, making sure all its actions are client-oriented. Reliability, sustainability and security are the pillars for which our clients invest their confidence in MAIB,” says Serghei Cebotari, chief executive of MAIB.
The launch of the mobile banking app MAIBank has been a notable success. Customers can pay for a wide range of utilities, conduct person-to-person and account-to-account transfers, and transfer-to-card transactions, among other services, through the app.
“We do our best to live up to [our customers’] expectations and meet their needs, by providing them with up-to-date banking products and services, including digital ones, many of them being exclusive in our market,” says Mr Cebotari.
Montenegro, Crnogorska komercijalna banka
Boasting a 77% jump in net profits in 2018 as well as an innovative digitalisation strategy, Crnogorska komercijalna banka (CKB) is The Banker’s Montenegro country award winner.
Among the 15 banks operating in Montenegro, CKB leads the market in terms of assets, loan portfolio and deposits. In 2018, the bank’s Tier 1 capital increased by 13.46%, while the ratio of non-performing loans saw significant improvement, down to 9.91% from 15.15% in 2017.
Recognising the changing needs of a digital-savvy customer base, CKB launched CKB GO, a full-service e-banking application that customers can use to manage their personal finances and make payments from a computer or mobile device.
Developed in partnership with Finastra, CKB GO is the first banking application in Montenegro that can authenticate with Apple’s FaceID technology and it has the capability to send and receive money via QR code generation. A year after launch, CKB GO is being actively used by more than 25% of the local market’s customer base, cementing CKB’s status as Montenegro’s leading digital banking provider.
Going forward, CKB is focused on its merger with local lender Podgoricka banka, formally Société Générale Montenegro. The integration process is expected to conclude in 2020 and will create the country’s largest bank by number of ATMs and physical branches, as well as by total assets, loans and deposit portfolios. Until the integration, the two banks will operate as separate entities.
“The tireless efforts of our employees, our commitment to innovation and the long-time loyalty of our clients has enabled us to prove CKB’s resilience and stability throughout the years. Our business journey has seen us become more digital, more secure, stable and simpler. We recognise our responsibility as a corporate citizen at the heart of society,” says CKB CEO Pál Kovács.
PKO Bank Polski performed well in 2018 in Poland’s highly competitive banking market. In local currency terms, net profits were up by 20.5%, while total assets and Tier 1 capital increased by 9.2% and 10.9%, respectively. The bank’s return on equity was healthy, at 10%, while its cost-to-income ratio was 44.2%. Non-performing loans, meanwhile, stood at 4.9%.
At the heart of PKO Bank Polski’s success is its emphasis on cutting edge innovation. To this end, it has launched an initiative called ‘Let’s fintech with PKO Bank Polski’, designed to engage with start-up and fintech ecosystems to develop solutions that drive operational efficiencies and enhance the customer experience.
“Our success is based on a strong commitment to digitalisation. We are totally focused on our customers and simply want them to be able to use services that meet their needs. That’s why innovation and digital transformation have already become part of the bank’s DNA, contributing to improve its efficiency,” says Zbigniew Jagieo, president of the management board at PKO Bank Polski.
As part of the bank’s digital transformation programme, PKO Bank Polski has implemented its ‘New Work Model’, based on agile project management methods. The aim is to accelerate the delivery of changes in the bank, meaning that, among other things, product and service development occurs at a much quicker pace. As a result of this model, improvements to the disbursement of loans through the bank’s mobile app mean these facilities are provided 60% faster than they were before. As a result, use of this loan by customers has increased by six-and-a-half times.
Meanwhile, the use of customer screens in branches, as well as SMS verification, has saved the use of 21 million sheets of paper in the context of authenticating customer instructions, according to the bank’s estimates.
Romania, UniCredit Bank Romania
UniCredit Bank Romania scooped the country award based on its strong 2018 performance, as well as its customer-centric approach to growth. In a competitive market, the bank is pursuing a digital transformation strategy that aims to generate operational efficiencies while meeting the changing needs of its diverse customer base.
In May 2018, UniCredit Romania became the first bank in the Romanian market to introduce electronic signatures. Recognised by the Certification Authority in Romania, it is equivalent to a handwritten signature and so greatly reduces customers’ administrative burdens by enabling them to interact with the bank from a distance if they choose. The electronic signature is available for use on products such as current accounts and associated products, as well as personal loans and credit cards, among others.
Meanwhile, UniCredit Romania has also worked hard to improve the functionality of its mobile banking app. Over the past 18 months, the bank has added various improvements, including the integration of a card wallet, real-time push notifications for transactions, foreign exchange payments, credit card reimbursements, a growing list of utility suppliers (for bill payments) and an updated user interface.
The app also includes a built-in money management function that classifies incomes and expenditure according to different categories, and permits customers to allocate monthly spending budgets for specific areas of outlay.
“The strong position that UniCredit Bank Romania has both in corporate and retail segments is a consequence of our ambition to always offer our clients a best-in-class experience, the banking products and services that really matter to them, and also to anticipate and implement the fast changes in customer demands and market trends – through digitalisation, innovation and continuous simplification of operations,” says Rasvan Radu, chief executive of UniCredit Bank Romania.
Russia’s Alfa-Bank is striving to position itself as the best mobile bank in Russia, particularly in the retail market. To that end, the bank introduced several new and innovative products and services to its mobile banking application in 2018. These include the order of a pre-approved credit card or loan, with the loan money being instantly credited to the user’s account.
Meanwhile, customers can also secure an instantly issued credit or debit card through the app. This service, known as digital delivery, allows users to apply for and receive a card that can be added to Google Pay, Apple Pay or Samsung Pay with immediate effect so is available to use for payments without delay.
Alfa-Bank is the only bank in the Russian market to offer this service. Previously, clients could order a card through the app but were required to wait for its physical arrival before they could use it. Any card can be ordered through the service, including co-branded ones. A similar offering was launched for small and medium-sized enterprise (SME) clients in May 2018, the virtual Visa card for SMEs.
The bank’s strategy is bearing fruit. In 2018, Alfa Bank’s return on equity was 19.5%, while its ratio of non-performing loans was 1.4%.
“Though we are not the biggest bank, we are the best bank for smart and free people. And today, relying on our previous achievements, we are building the best bank and laying the foundation for the next 30 years of Alfa-Bank’s history,” says Vladimir Verkhoshinskiy, chief executive of Alfa-Bank. “Our success is measured by client confidence. We earned the trust of more than 1 million new clients this year. We are thankful to them and to everyone who has stayed with us for years. We are grateful for their trust.”
Serbia, UniCredit Bank SerbiaSerbia, UniCredit Bank Serbia
UniCredit Bank Serbia enjoyed an outstanding year in 2018. Net profits increased by 39% in local currency terms, while total assets and Tier 1 capital grew by 21% and 18%, respectively. This performance was mirrored in the bank’s return on equity in 2018, which came in at 12.5%, up from the 9.9% recorded in 2017. Meanwhile, its cost-to-income ratio also moved in the right direction, falling to 38.7% from 43% over the same period. The bank’s ratio of non-performing loans (NPL) also demonstrated an encouraging progression: in 2018 this figure was 3.3%, down from 6.2% in 2017.
The judging panel was particularly impressed with the bank’s approach to small and medium-sized enterprise (SME) lending in the country. Through a pre-approval process – which includes verification of public documents on a company, comprehensive data analysis and the distribution of this information to the bank’s branch networks, among other things – UniCredit Bank Serbia can serve its SME clients with efficiency and speed.
For SME clients, this approach means the time to receive cash is just one to two days, while the bank’s customer reviews indicate that lending approval limits generally correspond to customers’ expectations. Notably, UniCredit Serbia has experienced a very low NPL rate linked to this pre-approval process – no small feat in what is recognised as a very difficult market segment to bank.
“UniCredit Bank Serbia has a key strength of which we are very proud: dedicated employees who always move one step ahead of our customers, continuously analysing the market in order to embrace new opportunities for innovation. Readiness to improve ourselves and adjust to the fast-changing environment are the keys to our success,” says Feza Tan, chief executive of UniCredit Bank Serbia.
Slovakia, Slovenská sporitel’na
Slovenská sporitel’na’s commitment to digital innovation, as well as the delivery of outstanding range of innovative products and services, ensured it the top position in the Slovakia country category. Its net profits were up by 12% in 2018, while total assets expanded by 6.7%. Return on equity, meanwhile, was a healthy 12.6% over the same period and the cost-to-income ratio was 48.3%.
Beyond these growth figures, the bank’s strategic focus on digitalisation and its efforts to position itself as the country’s leading digital lender captured the judges’ attention. In 2018, Slovenská sporitel’na presented its customers with a new digital banking offering known as ‘George’. Available online and through a mobile application, George provides an easy way for clients to engage with the bank and manage their finances digitally. In terms of security, George uses biometrics and an online database from the Ministry of Interior of the Slovak Republic to verify a user’s identity. Prospective customers are not required to visit a branch to open an account as they only need a smartphone and ID card.
The bank also began providing mortgages online in 2019. Clients can apply for a mortgage through George by sending in the necessary application and documentation electronically. This is processed by the bank and, if approved, the customer need only visit a branch once, to sign the contract.
Peter Krutil, chief executive of Slovenská sporitel’na, says: “The success of our bank is based on three key pillars: our people, innovations and responsibility. I am proud that we have confirmed the position of the leading financial advisor and the most relevant partner for life and businesses in the country. We are continuously bringing prosperity to our region and clients.”
SKB Banka successfully navigated the difficulties linked to Slovenia’s softer growth trajectory to register a robust performance in 2018. Net profits increased by 32% for the year, while total assets and Tier 1 capital expanded by 4.4% and 2.7%, respectively. This was accompanied by a return on equity of 16.5% and a cost-to-income ratio of 49.8%. The lender’s non-performing loan ratio reached 3.4%.
These figures point to a well-run and healthy institution. But it was the bank’s efforts in the area of waste management, and environmental policies more generally, that won it the 2019 country award for Slovenia. SKB Banka actively manages all waste produced by its business operations, conducted in line with state legislation.
All shredded waste paper generated by the bank is sent for recycling, while electronic waste equipment from SKB branches is centrally collected at its headquarters and delivered to a collecting entity that arranges the recycling of usable materials and the destruction of non-recyclable items and components. Meanwhile, the bank is also taking measures to reduce its paper consumption as well as its energy consumption and carbon dioxide emissions.
Beyond the bank’s environmental credentials, SKB upgraded its mobile bank ‘Moj@SKB’ to enhance client security and made further improvements to its customer contact centres and SMS messaging options. A new mobile application known as ‘Flik’ was launched in 2019, which allows clients to make payments, and can be used at point-of-sale terminals or with QR code technology. In addition, SKB launched a new website with a fresh look and improved the interface to better meet the digital needs of its clients. In terms of its physical presence, SKB also partnered with a market peer to expand the availability of its ATM network across Slovenia.
Raiffeisen Bank Aval’s list of achievements are numerous but it was its work in supporting small and medium-sized enterprises (SMEs), as well as the execution of a commendable digital strategy, that The Banker’s judging panel highlighted. In 2018, the bank introduced its new ‘Business Navigation’ service for its micro and SME business clients. The service provides this client base with a full suite of business-oriented functions that include individual counselling, full enterprise diagnostics and development plans, individual proposals tailored to the needs of each business, as well as long-term financial solutions.
In 2018, the bank signed an agreement with the European Investment Bank (EIB) to support Ukrainian companies. Under the arrangement, the EIB will cover part of the credit risk linked to the financing of these clients. The total limit of the financing agreement is €68.5m, while the maximum credit line for an individual entity has been capped at €5m.
In the digital space, the bank upgraded 20 locations in its branch network to meet the needs of its client base. Coupled with an extensive branch redesign, the bank also improved several of its in-branch processes to focus more on digital technologies, and introduced the role of digital ambassador to help familiarise clients with its online service and product offerings.
Meanwhile, in 2018 the bank introduced ‘Raiffeisen Online’, an online banking system that includes a desktop version as well as iOS versions for mobile. With quick and easy remote registration, Raiffeisen Online provides customers with more opportunities to control and manage their personal finances.
Oleksandr Pysaruk, chief executive of Raiffeisen Bank Aval, says: “Our success is built on long-term partnership with our clients, the professionalism of our staff and the support of our shareholders.”
